18 hours ago
FMA Cancels Filcare Services Limited's Financial Advice Provider Licence
The Financial Markets Authority (FMA) - Te Mana Tātai Hokohoko – has cancelled Filcare Services Limited's (Filcare) Financial Advice Provider licence, at its request.
Filcare held a full financial advice provider licence, providing financial advice to approximately 1,800 retail clients, many of whom were migrant workers from the Filipino community.
FMA's Head of Perimeter and Response Helena Lewis said, 'Filcare's cancellation follows the termination of its distribution agreement with Fidelity Life Assurance Company Limited and AIA New Zealand Limited, and our subsequent inquiry into its affairs.'
The FMA's inquiry found that Filcare's advisers had contravened its licence obligations by failing to:
keep adequate records in relation to advice given to its clients,
ensure its clients understood the financial advice they received,
exercise care diligence and skill when providing financial advice to its clients,
provide adequate disclosures relating to advice, and
demonstrate that recommendations made to clients were suitable.
'In particular, we observed that clients did not receive adequate nature and scope disclosures and were therefore unable to make an informed decision about whether to seek, obtain, or act on the advice,' said Ms Lewis.
'We also found that Filcare advisers failed to demonstrate that the recommendations made to clients were suitable. As an example, for a vast majority of clients, the documentation on file lacked the requisite detail to clearly show how the selected levels of cover were determined, and that the recommendation matched the risk tolerance, financial situation, and needs and goals of the client.'
In cases of replacement advice, the FMA observed minimal evidence that the advisers had considered and reviewed:
the existing product to see if it continues to meet the clients' relevant circumstances,
the new product recommended to the client,
the potential benefits that may be lost, and
any other significant consequences of the switch for the client.
'Filcare advisers failed to take reasonable steps to ensure clients understood the implications of the financial advice,' said Ms Lewis.
'In files concerning replacement advice, there was no evidence that clients were informed of the potential risks of replacing existing policies, such as losing benefits they might have otherwise received under original policies, or the likelihood of exclusions or limitations associated with changes in health, lifestyle, or occupation that have occurred since the original policy has been taken out. Clients were also not given sufficient time to understand the advice before deciding whether to follow through with it.'
At the time of FMA's inquiry, Filcare engaged two financial advisers, one of which is also the sole director of Filcare. The FMA also found that Filcare failed to take reasonable steps to ensure that advisers complied with their duties.
'The FMA will continue to take action where appropriate to ensure that all New Zealanders have access to fair, transparent and efficient financial services,' concludes Ms Lewis.
Where clients can get help
Filcare's clients can complain to Financial Services Complaints Limited – A Financial Ombudsman Services, which is a disputes resolution service that is free to consumers. For clients who believe they have been affected and have concerns, we recommend they contact:
